ICAP's NYFR rates mixed, euro rates decline

Short-term borrowing rates in the United States were mixed on Wednesday but remained near record lows, while bank-to-bank euro funding costs fell with the benchmark rate hitting a fresh low. Three-month borrowing rates for US banks were 0.2537 percent on January 13, according to ICAP's New York Funding Rate, down from 0.2544 percent on Tuesday. That rate remains near the recent record low of 0.2500 percent from late December.
-- Benchmark dollar, sterling Libor rates steady
ICAP's one-month NYFR was 0.2219 percent, up from the previous session's 0.2189 percent. That rate also remained near record lows set in December. In Europe, bank-to-bank euro funding costs fell on Wednesday with the benchmark rate setting a new low as the European Central Bank looked set to maintain the current liquid environment following its monthly meeting this week. The benchmark three-month euro London interbank offered rate was fixed at an all-time low of 0.63250 percent, down from 0.63500 percent on Tuesday.
The equivalent dollar rate was unchanged at 0.25125 percent but not far off the record low of 0.24875 percent set last month. On Thursday, the ECB is expected to keep eurozone interest rates on hold at a record low 1.0 percent and signal that it remains in a neutral gear as it waits for more signs of economic recovery.
Last month, the ECB injected nearly 100 billion euros of one-year funds into the money market in its third and last offering of such funds, keeping liquidity ample for the first half of 2010. At the first one-year tender in July, the ECB provided banks with 442 billion euros. This was followed by a much smaller 75 billion injection in September.
Interest rate-sensitive Euribor, Fed Fund and short sterling futures have rallied since the start of the year with central bank rhetoric and data bolstering the view that major central banks are firmly on hold. September Euribor futures, for example, have gained more than 20 ticks since the start of the year and the equivalent short-sterling contract around 30 ticks. Underscoring the excess liquidity, commercial banks deposited 227.612 billion euros at the ECB's overnight vault, the most since August.